Genius or scoundrel - patently, someone is wrong

Leonie Lamont

TO HIS friends and supporters, the secretive Australian inventor and entrepreneur Kia Silverbrook is a genius, possibly the most prolific patent holder in the world who stands alongside the likes of Thomas Edison.

To his enemies, which include a foundation owned by one of America's richest men, George Kaiser, Mr Silverbrook and his partner Janet Lee are liars and cheats, who induced them over the course of a decade to invest $US610 million in a revolutionary printing technology but are stymying its commercial development.

For Mr Silverbrook and Ms Lee, a legal stoush extending from the High Court in England to the Oklahoma District Court, domicile of the various Kaiser-Francis investment and charitable trusts, is a heavy-handed attempt to strip them of their intellectual property rights and the billions of dollars to be earned from the sale of the Memjet printer technology.

At Silverbrook Research's premises in the North Ryde technology precinct, the lights have been turned out. The US investors have cut off funding and the 200 scientists who work on the project have been sent on leave as the legal dispute comes to a head. Few staff are talking, imbued in a company culture that takes its cue from the intensely private founder.

''We are devastated that Australia's best and brightest scientists and engineers have been made to take annual leave from our Australian facilities,'' Mr Silverbrook and Ms Lee said in a statement to Fairfax Media.

''We have had to pay the staff since February from our own pockets, while our US-based customer has over $22 million in outstanding invoices owing to Silverbrook Research.

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''It would be tragic for a company which is a pioneer in Australia's knowledge economy to lose these brilliant people because of the hardball tactics of a US group.''

The super-fast Memjet digital printing technology was regarded as so revolutionary when it was announced in 2007 that many thought it was a hoax. But the technology has been proved and last year won numerous computing and printing awards.

On Friday in London, lawyers for Mr Silverbrook filed a response to a case brought by the Kaiser trusts and foundation in September. The Americans want, among other things, an Australian accountant to audit Silverbrook Research's spending on the project.

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The George Kaiser Family Foundation is the controlling shareholder in Memjet. Mr Kaiser, a philanthropist and fund-raiser for Barack Obama, and the 34th richest person in the US, is not a party to the lawsuits, although Mr Silverbrook points out in court documents that Mr Kaiser personally has invested more than half the $US610 million.

In concurrent action in
Oklahoma begun in March, the family foundation alleges fraud, deceit and negligent misrepresentation. It wants a permanent injunction stopping Silverbrook Research terminating the Memjet licence agreements, and selling or relicensing the intellectual property.

It accuses the Silverbrook and Lee companies of being ''adept at spending cash'', of ''skimming profits from Memjet'' and Mr Silverbrook and Ms Lee of being ''cunningly smart''.

A public relations consultant, Tim Allerton, who is acting for Silverbrook, said the Oklahoma lawsuit was ''part of a hardball commercial negotiation by [the family foundation] over the ownership and control of the intellectual property''. The lawsuit claims were ''wildly inaccurate'', he said.

In court documents Mr Silverbrook said Memjet management failed to commercialise the technology. All the investors now agreed Memjet should be sold to a big electronics group and a valuation report from the US investment bank MDB Capital Group identified nine companies that could justify a price between $1.5 billion and $3 billion ''on the basis that the technology would, at least partially disrupt existing printer markets''.

In the documents Mr Silverbrook said the Kaiser parties now wanted to eliminate all minority shareholder rights before a sale.

Mr Silverbrook, a university maths and science dropout, filed his first patent when he was 14 and has more than 4400 patents granted in the US alone. During a dispute with the NSW Chief Commissioner of Revenue in the early 2000s over the non-payment of payroll tax, it was revealed that his business, which conducted research and development in digital technologies and materials science, had grown from one employee in 1994 to 130.

By 2010, Silverbrook Research employed 500 people, according to evidence in a District Court case about salary entitlements.

Silverbrook says it now has 300 employees and 70 per cent of its workforce hold PhDs. It hopes the 200 staff sent on leave will soon be able to return to work as it negotiates a legal solution.